Saudi Arabia: We’ll Pump The World’s Very Last Barrel Of Oil

Saudi Arabia isn’t buying the peak oil demand narrative.

OPEC’s largest producer continues to expect global oil demand to keep rising at least by 2040 and sees itself as the oil producer best equipped to continue meeting that demand, thanks to its very low production costs.

Saudi Arabia will be the one to pump the last barrel of oil in the world, but it doesn’t see the ‘last barrel of oil’ being pumped for decades and decades to come.

“I don’t see peak [oil] demand happening in 10 years or even by 2040,” Amin Nasser, president and chief executive officer of Saudi oil giant Saudi Aramco told CNN Business‘ Emerging Markets Editor John Defterios on the sidelines of the World Economic Forum in Davos this week.

“There will continue to be growth in oil demand … We are the lowest cost producer and the last barrel will come from the region,” Nasser told CNN.

For several years, Nasser has been saying that peak oil demand is nowhere in sight, that petrochemicals will drive oil demand growth through 2050, and that all the ‘peak oil demand’ and ‘stranded resources’ talk is threatening an orderly energy transition and energy security.

Saudi Arabia—which has just announced that its huge oil reserves are slightly higher than previously estimated—looks to diversify its economy away from heavy dependence on crude oil, but one of the goals of its Vision 2030 diversification plan is to use less oil in domestic power generation to free up more barrels for exports.

As the world’s top crude oil exporter, Saudi Arabia will not be giving away easily its crown and the geopolitical clout that comes with it.

The Saudis have the two key ingredients to continue pumping oil till kingdom come—huge reserves and low production costs.

In addition, various organizations, including OPEC, estimate that shale production in the world’s current top oil producer—the United States—will peak at some point in the late 2020s, reviving demand for crude oil from OPEC (and its biggest oil producer Saudi Arabia).

Earlier this month, Saudi Arabia announced that an independent estimate of its oil reserves by DeGolyer and MacNaughton (D&M) showed that the Kingdom’s total proven oil reserves were 268.5 billion barrels as of the end of 2017, up from around 266 billion barrels previously estimated.

DeGolyer and MacNaughton said last week that it completed the first contemporary independent assessment of reserves in Saudi Arabia, adding that at this point, it would “make no further comments on this extensive project.”

“This certification underscores why every barrel we produce is the most profitable in the world, and why we believe Saudi Aramco is the world’s most valuable company and indeed the world’s most important,” Saudi Energy Minister Khalid al-Falih said in the statement released by the Saudi Press Agency.

Saudi Aramco’s cost of production is just $4 a barrel, al-Falih later said in a news conference, as carried by Reuters.

Saudi Arabia may need oil prices higher than $80 a barrel to balance its budget because most of the income comes from oil. Yet, the Kingdom has what is probably the world’s lowest cost of pumping one barrel of oil.

While surging U.S. shale production has been boosting the global oil supply which Saudi Arabia and OPEC and non-OPEC Russia are looking to drain again with a new round of production cuts, current estimates point to shale peaking in the late 2020s.

According to the International Energy Agency (IEA), U.S. tight oil production will continue rising through 2025, and “Thereafter, with our current estimate for recoverable resources, production starts to fall gradually.”

In its latest World Oil Outlook, OPEC sees non-OPEC supply peaking in the late 2020s, mainly because of expected U.S. tight oil supply peak. In the medium term, through 2023, demand for OPEC crude is seen waning to 31.6 million bpd in 2023 because of non-OPEC supply growth. But after that, with the U.S. shale peak expected in the late 2020s, OPEC forecasts that demand for its crude will start rising again, to reach nearly 40 million bpd by 2040.

Will the world need oil in 2040? Saudi Aramco’s answer to this question is an emphatic ‘yes’.

The world will continue to need a lot more oil and a lot more exploration will be needed just to offset declining oil production at mature fields, Aramco’s Nasser said in Houston last year.

The energy transition is much more complex than simply replacing oil with renewables and electric vehicles (EVs), Nasser said last March and added: “In other words, I am not losing any sleep over ‘peak oil demand? or ‘stranded resources?.”

20 Comments on "Saudi Arabia: We’ll Pump The World’s Very Last Barrel Of Oil"

Davy on Fri, 25th Jan 2019 1:03 pm

I find it unlikely we will leave fossil fuels ever, even if things collapse they will be used in some way. Let’s say we do a good job of leaving fossil fuels KSA will still have the option of using fossil fuels internally. There are plenty of high value uses for oil besides transport. I am a firm believer in pushing hard into renewables but as a realist I realize fossil fuels will be needed to get there. We are still a long way off unfortunately and lots of oil will be used in the meantime.

JR on Fri, 25th Jan 2019 2:04 pm

Nothing like a brutal monarchy to claim that they’re “pump the last barrel” as they help destroy planetary habitability for all living things. Their arrogance is incredible.

“Canada’s most shameful environmental secret must not remain hidden
Tar sands have been dubbed the largest – and most destructive – industrial project in human history. And Canada is on the forefront of their exploitation
The truth is, Canada cannot yet meet its own arguably weak climate targets. The country plans to expand oil and gas production despite evidence that this is inconsistent with Paris goals. Then, there is the issue of the toxic sludge of waste products from Canada’s tar sands destruction, which form what are known as tailings ponds.
As of this year, these ponds hold 1 trillion litres of sludge that is unlike any other industrial byproduct in the world. They contain a unique cocktail of toxic chemicals and hydrocarbons that will remain in molasses-like suspension for centuries if left alone.
These open, unlined ponds currently cover 220 sq km, an area of land equivalent to 73 New York Central Parks. A single tailings pond – the Mildred Lake Settling Basin – has been identified by the US Department of the Interior as the world’s largest dam.”https://www.theguardian.com/commentisfree/2017/nov/14/canadas-shameful-environmental-secret-tar-sands-tailings-ponds

makati1 on Fri, 25th Jan 2019 6:09 pm

KSA will revert to camels and desert long before the last barrel is recovered somewhere else in the world.

Some would like to blame KSA for the destruction of the ecosystem, but the major blame is the West that started the whole oily world over 100 years ago for $$$$. No thought given to the consequences.

Nothing has changed. We are committing species suicide with every trip to Walmart. Don’t blame others if YOU are also guilty. They only sell it. YOU turn it lose into the atmosphere.

Davy on Fri, 25th Jan 2019 6:13 pm

The majority of Alberta tar sands projects are American owned and controlled amouse.

Anonymouse on Fri, 25th Jan 2019 6:21 pm

What is a majority dumbass? Got any figures? quit triggering me Juan.

Anonymouse on Fri, 25th Jan 2019 7:23 pm

In case it was not obvious enough, all the posts above, are davyMOB fakes, and are not mine. Nor do I intend to say anything more about the matter in this thread.

You should stick to word salads that no one is remotely interested in reading. Even your fake posts suck ass.

So have your fun, davyMOB, you delusional dumbfuck retard.

makati1 on Fri, 25th Jan 2019 8:06 pm

Anon, Davy has ruined the site for normal people. Like his government, if he cannot rule, he destroys. Delusional arrogance, just like those in Dc.

Davy on Fri, 25th Jan 2019 8:39 pm

OK dumbasses. I’m going to bed now to re-read all of my exceptional word salad essays. All posts from now on by makati1, JuanP, Anonymouse1, myself, and all of my sock puppets are not me.

I’ll be back in the morning with a fresh bottle of bleach to clean up MY board.

Oh yah, and we don’t want any of you in my country any more too.

GET OUT!

FuelShortageComingYouAreDeadLoser on Fri, 25th Jan 2019 11:37 pm

Same complain almost all over the world: cost of life is too high, salary too low, too much inflation.

“Caribbean island Bonaire is adding a 6 megawatt energy storage system to help balance its solar and wind assets with backup diesel generators, opening up the potential for greater renewable penetration. Additional solar will expand on the 2015 pilot project that included close to 800 solar panels.”

“Bonaire, part of the Netherlands Antilles, will soon have a renewable portfolio of 11 MW of wind, 6 MW of new energy storage, a pre-existing 3 MW battery bank, and the small solar pilot. These assets will be used to limit the use of the 14 MW of diesel generator and the 3 MW backup diesel generator, says Lisa Magnuson, the Senior Vice President for Global Marketing at Greensmith Energy, in San Francisco. The new energy storage solution will provide grid stability and reliability, as well as prevent curtailment of generation from renewable sources. The GEMS software system will manage the island’s generation assets as a microgrid. The system is expected to be online in April.”

“The island’s 12 wind turbines now can supply up to 90% of the island’s electricity at peak load, which corresponds to about 40% of its annual electricity demand. Surprisingly, the average wind speed on the island is only 7 miles per hour, much lower than some wind generators require to operate. Located about 50 miles off the coast of Venezuela, Bonaire is a Dutch “special municipality” with a population of close to 19,000, a land mass of 111 square miles, and a tourist trade that brings in over 70,000 tourists every year. The government of the island became a part of the Netherlands in 2010.”

“The latest data from the Electric Reliability Council of Texas (ERCOT), the state’s grid operator, has revealed that Texas’ energy market is now 30% carbon-free and dominated by wind energy, which accounts for 23.4% of 2019 generation capacity. According to figures published by ERCOT last week, natural gas accounts for 52.4% of 2019 generation capacity and is followed by wind energy with 23.4% and coal with 15.9%. The 30% carbon-free figure that is being bandied about comes from adding up wind with nuclear, solar, and “other” generation sources which brings the total carbon-free energy generation to 31.8%.”

2000 Watt per head is 7 x standard 285 Watt panels for 1400 euro. Add a transformer of a few hundred, installation cost and you end up with 3000 euro all in, that can be easily financed for 10-20 years and you end up with a monthly finance bill that is lower than your monthly utility payments for electricity.

Next you buy a 5-10 MW electrolyser and produce your hydrogen locally, which eliminates having to have your grid upgraded for all that extra renewable electricity:

Tout the increased amount of renewables being used to power industrial civilization but salience is manifested in the renewed increase of emissions and the Keeling Curves’ climb skyward towards the 6th Mass Extinction.